another advantage to this setup seems to be that you can also trade foreign stock markets as well as other markets that the SEC currently won't allow u.s. citizens to trade.
Very, Very tricky to execute your idea....don't know if its possible. These are regular offshore annuities that comply with the new IRS tax regs. Might add some insite. Quite costly to set up your structure, then hope the "insurerer" won't run off with your money(especially since its THEIR asset now)--happens in the carribean! http://www.jml.com/file_download/E-94 Special_fixed def.pdf http://www.jml.com/file_download/E-93 Special_variable.pdf
Neither a private annuity or a variable annuity will work. Reasons as follows: Private annuity occurs when A exchanges assets with B in return for income stream from B. B can then sell trade etc assets, and tax liability in relation to this occurs to B. B must not be an insurance company. This planning is normally used for estate planning in the US - there has been some aggressive offshore use, but if your friendly IRS inspector looks at it, he or she will turn purple, sprout horns and be very nasty to you, because of course you have not really given away the assets but are still managing them/controlling them etc. Variable annuity will not work for similar reasons as you will be exercising "incidents of ownership" (breaching Section 817(h) by trading the underlying, you will not meet the diversification rules (need to be at least 5 investments, no one investment more than 55% etc). Many other reasons but that should do. Also as a US citizen as others have stated you are taxable on your worldwide income, you are required to report any foreign trust or account (includes setting up offshore company) and declare (Form B720) any premium paid toa foreign insurer. In a nutshell best to use a recognised onshore entity that CPA who specialises in traders recommends. P.S. I am not an IRS inspector! Good trading!
Neither a private annuity or a variable annuity will work. Reasons as follows: Private annuity occurs when A exchanges assets with B in return for income stream from B. B can then sell trade etc assets, and tax liability in relation to this occurs to B. B must not be an insurance company. This planning is normally used for estate planning in the US - there has been some aggressive offshore use, but if your friendly IRS inspector looks at it, he or she will turn purple, sprout horns and be very nasty to you, because of course you have not really given away the assets but are still managing them/controlling them etc. Variable annuity will not work for similar reasons as you will be exercising "incidents of ownership" (breaching Section 817(h) by trading the underlying, you will not meet the diversification rules (need to be at least 5 investments, no one investment more than 55% etc). Many other reasons but that should do. Also as a US citizen as others have stated you are taxable on your worldwide income, you are required to report any foreign trust or account (includes setting up offshore company) and declare (Form B720) any premium paid toa foreign insurer. In a nutshell best to use a recognised onshore entity that CPA who specialises in traders recommends. P.S. I am not an IRS inspector!
thanks intel for your post. all of this of course comes down to law and court cases, and how willing the IRS is to defend ambiguous tax code. as i look into this further, i am nowhere near capitalized enough anyway to make such a structure work in my favor yet, so its kind of a wash right now -- but this is good stuff, thanks .....